Arizona workers’ compensation laws mandate that employers obtain coverage regardless of the number of employees they have. This means they need workers’ comp even if they have only one part-time employee. Business owners in Arizona pay an average of 83 cents per $100 in wages for workers’ compensation insurance.
You can make shopping for workers’ compensation insurance simple by using an online marketplace like CommercialInsurance.net. With one short application, the company will shop your policy needs among the 200-plus insurance carriers, brokers, and agencies it partners with. Getting workers’ compensation coverage has never been easier.
What Are Arizona Workers’ Compensation Requirements?
Workers’ compensation is run by individual states, so requirements vary. In Arizona, workers’ comp laws, administered by the Industrial Commission of Arizona (ICA), make coverage a nearly universal requirement for the state’s business owners. This means that employers with at least one part-time employee needs to obtain workers’ compensation insurance, and that includes workers who are:
- Family members
Arizona is considered a “no-fault” state, meaning policies cover injuries and illnesses obtained through work-related activities no matter who is responsible for them. While workers receive benefits regardless of fault, they also give up the right to sue their employers for work injuries in most cases.
Who Doesn’t Need Workers’ Compensation Insurance in Arizona?
Workers’ compensation requirements are broad in Arizona, but there are exceptions. For example, employers are not required to get workers’ comp for:
- Domestic servants in private homes,
- Independent contractors
- Casual workers
Additionally, sole proprietors have to get workers’ compensation for their employees, but they are not required to include themselves in the coverage. They can, however, opt for self-employed workers’ compensation if they don’t have employees.
Please note: Employees can opt-out of workers’ compensation if they notify their employer in writing prior to a workplace injury or illness. The notification must be signed, dated, and sent in duplicate.
Where Can I Obtain Workers’ Compensation Insurance in Arizona?
Arizona has a competitive open market when it comes to workers’ compensation insurance. This means that private insurance carriers compete for the opportunity to write workers’ comp policies for companies as opposed to businesses having to purchase coverage from the state. If a business is declined by two or more private carriers, it can apply to Arizona’s assigned risk plan through its administrator: the National Council of Compensation Insurance.
Top Workers’ Compensation Insurance Insurers in Arizona
Shopping for insurance takes time and energy and often comes with a lot of frustration when you don’t know how to compare quotes. CommercialInsurance.net takes the guesswork out of quoting by taking one application and shopping for the best policy on your behalf. It has more than 200 partners that include The Hartford, Liberty Mutual, and Progressive Commercial, so you know you’ll be paired with a quality provider.
The Hartford is a small business insurance expert that constantly is looking to innovate how it writes insurance policies. Its biggest appetite is for professional service providers who work in office environments, such as attorneys and accountants. One thing about its workers’ compensation policy that sets them apart from the rest is its automatic extended reporting timelines and coverage for reasonable expenses when you assist with a lawsuit.
Liberty Mutual is a comprehensive insurance carrier that offers both personal lines and business lines of insurance. Liberty Mutual believes in building coverage designed for the industry a business is in to make sure companies are protected for their real risks. Small businesses in the food and beverage industry enjoy good rates with Liberty Mutual because the company understands how to underwrite this market and makes premiums competitive.
Chubb is a major business insurance carrier, covering companies throughout the United States and around the world. This carrier has worked hard to innovate its underwriting practices to be able to write many business policies directly from online quotes quickly and cost-effectively. When it comes to workers’ compensation, the company has a unique structure that utilizes real nurses as case managers to make the claims process efficient and effective for injured workers.
biBERK eliminates the middleman and sells business insurance lines directly to business owners to help them save up to 20% on costs. The company is owned by Berkshire Hathaway, giving it the financial security to pay claims readily. biBERK can help small retail establishments with a policy in a few short minutes.
Can Businesses Self-insure in Arizona?
Arizona workers’ compensation laws allow some businesses to self-insure. To do so, a company must meet the following minimum qualifications:
- At least $2 million in payroll
- At least $50 million in assets or a cash flow ratio of at least 0.25.
- Have been conducting business in Arizona for at least five years
These requirements make it nearly impossible for most small and mid-sized businesses (SMBs) to qualify for self-insurance.
How Much Does Arizona Workers’ Compensation Insurance Cost?
Workers’ compensation premiums are contingent on many things that include your job classification, total payroll, and claims history. Additionally, each insurance carrier has preferences for the types of policies it writes, called an appetite. When a carrier has a strong appetite for an industry, its rates are generally less expensive than the competition.
The average workers’ compensation rate among all work classifications in Arizona is 83 cents per $100 of payroll, according to data from The National Academy of Social Insurance. This means that for every $100,000 in payroll, employers pay an average of $830 in premium. Any one employer may pay significantly more or less, depending on its unique situation.
Sample Arizona Workers’ Compensation Rates by Class Code
Industry Class Code
5183 Plumbing Contractors
7208 Towing Company
8742 Sales Professional
8810 Clerical - Office
8824 Nursing Home
8831 Animal Shelters
9063 Fitness Center
Arizona Workers’ Compensation Cost Example
Let’s use a masonry company that makes cement walls as an example for calculating workers’ compensation premium. Assume the company has five employees: four masons and one clerk. They have not had any claims in the past three years.
The payroll for the four masons totals $200,000 for the year. If we use the low rate of $6.72 masons (class code 5022), the calculation for their portion of the business’ workers’ comp premium looks like this:
($200,000 / 100) x $6.72 = $13,440
The clerk’s annual salary is $35,000, but it gets separated out from the masons and assigned class code 8810. This is because clerks are common across many industries and are usually less risky positions than others in the same business. If we use the low rate for the clerk, the calculator is:
($35,000 / 100) x 7 cents = $24.50
Add the two together to get the total estimate: $13,440 + $24.50 = $13,464.50. This estimate could go up or down depending on the business’ experience modification rate (EMR). An EMR is a number that represents the business’ claims history. More claims results in a higher EMR and, ultimately, higher premium. Our mason company does not have any claims, so its EMR would have a positive impact on its final premium.
Arizona Workers’ Comp Audit Requirements
When you purchase a workers’ compensation policy, you are paying an estimated premium for the year. This is because the premium is contingent on payroll, which can fluctuate throughout the year. A workers’ compensation audit is conducted at the end of the policy term to reconcile what the estimate was with what the actual payroll is.
For those who overestimated, a premium refund will be issued. For those who underestimated, a bill will be sent. This audit is used to estimate the next year’s premium as well. Failure to complete the audit will result in a cancelation of your policy.
What Does Workers’ Compensation Insurance in Arizona Cover?
Workers’ compensation pays for costs incurred by an employee who is injured on the job or obtains a work-related illness. The insurance pays:
- Medical bills
- Disability payments
- Death benefits
In the event that a worker is unable to return to their job duties, vocational rehabilitation may also be covered under workers’ compensation insurance.
There is a seven-day waiting period to get paid lost wages — up to 66.67% of the average weekly wage for temporary disability. If the injured employee does not receive compensation for lost wages for the first seven days. Those seven days of lost wages are compensated, however, if the employee cannot work for 14 days for more.
It is possible to get up to 75% of the average weekly wage a doctor deems the employee’s injury to be permanent and prevents them from returning to the essential duties of their regular work.
Arizona Workers’ Compensation Coverage Example
Jose, a delivery driver, injures his neck when he’s in an auto accident while working. His injury keeps him from working for nine days after the accident. His employer’s workers’ compensation insurance pays all the medical costs, including chiropractic work so that Jose can get better. After the seven-day waiting period, Jose receives disability payments for his lost wages from days eight and nine, receiving a prorated amount based on 66.67% of his average weekly wage. If he had been out of work for 14 days, Jose would have received retroactive disability payments for the first seven days of his injury.
What Are the Penalties for Not Having Workers’ Compensation Insurance in Arizona?
If an employee suspects that an employer doesn’t have workers’ compensation insurance, they can file a report with the ICA. The claim goes to the Special Fund Division/No Insurance section, which pays the benefits and then seeks remuneration plus a penalty of 10% of the claim or $1,000, whichever is greater, from the noncompliant business.
Whether or not an employee files a claim, an uninsured employer in Arizona may also be fined:
- $1,000 for the first offense
- $5,000 for the second offense within five years
- $10,000 for the third offense within five years
The ICA may also get a court order to stop the business from operating, and the business owner can be charged with a Class 6 felony.
How Do I File a Workers’ Compensation Claim in Arizona?
Both employers and employees have responsibilities when it comes to filing a workers’ comp claim in Arizona. To start, injured workers must report their injury or illness to their supervisors when it occurs or as soon as they realize the connection to their job. Failing to do this may impact their ability to receive benefits. Their doctor should provide them with a Worker’s and Physician’s Report of Injury (Form 102), which the doctor will submit to the ICA. If the doctor doesn’t supply Form 102 at the appointment or emergency room visit, the worker can file a claim by submitting Worker’s Report of Injury (Form 407) to the ICA.
Signing and submitting these forms is how an injured worker applied for benefits. Once the ICA receives either form, it notifies the employers’ insurer.
While employees are responsible for making sure the claim is filed, employers have other responsibilities, such as:
- Giving their workers’ comp insurer name, plus their policy number and its expiration date to the injured worker
- Submitting an Employer’s Report of Industrial Injury (Form 101) form to their insurer and the ICA of the incident within 10 days of being notified of an injury
- Immediately notifying the ICA Claims Division by phone or telegraph of any fatalities
Arizona Workers’ Compensation Deadlines
Arizona workers’ compensation laws set forth a number of important deadlines for all parties involved. For example, employees:
- Must notify employers of occupational injuries or illness immediately
- Have up to one year from the injury to file a claim
- Have up to 90 days to appeal a denial
Additionally, employers have 10 days from receiving notice of an injury to report it to their insurance carrier and ICA. Insurance carriers then have 21 days to accept or deny the claim or risk paying the employee penalty benefits.
Arizona Workers’ Compensation Resources
800 W. Washington St.
Phoenix, AZ 85007
2675 E. Broadway Blvd.
Tucson, AZ 85716
- Workers’ and Physician’s Report of Injury: Doctors give injured workers Form 102 to complete. Then, the doctor submits the form to the ICA.
- Workers’ Report of Injury: If an injured worker does not receive Form 102 from their physician, they can submit Form 407 to the ICA to apply for benefits.
- Employer’s Report of Injury: Employers must submit Form 101 to their insurer and the ICA within 10 days of being notified of a workplace injury.
- Request for Hearing: If their claim is denied, employees can use a Request for Hearing form to start an appeal.
Arizona has very strict rules mandating workers’ compensation insurance for all employees with few exceptions. Employers without a policy could face steep penalties and fines. Don’t get stuck without coverage.
CommercialInsurance.net is a marketplace where you will be paired with the best insurance provider for your needs. It has partnered with more than 200 insurance carriers, brokers, and agencies to bring affordable workers’ compensation to small business owners. Get a free quote in minutes.